Dear Prime Minister Trudeau: Congratulations on your election victory! As you settle into your new office I am sure you are struck by the awesomeness of your accomplishment and of country which has chosen you.
Ours is a country rich in human and natural resources. Within the rich natural resources you may, should you choose, find a means to better the lives of Canadians and the world, and particularly to change for the better the circumstances of Canadians in remote communities.
As a participant in the mining industry in Canada I have some suggestions for how to strengthen the Canadian economy and make Canada a proud global citizen.
I am sure you have received binder after binder of briefing notes on various sectors of the Canadian economy. If I may, I want to leave you with a few facts about the mining industry in Canada; namely that our industry:
- employs close to 400,000 Canadians;
- has over the past ten years paid approximately $70 billion in taxes and royalties to Canadian governments; and
- is a global leader with 70% of global public markets finance for the mining sector in 2014 being raised in Canada.
This paints a pretty good picture. What is missing, however, is that this is an industry in crisis. You may have also learned that: s mining finance is down 60% since 2007, with equity finance down 80% since 2007; s mining exploration budgets were down 26% in 2014 and sure to be down again in 2015 when the books are closed; and s by mid-2015 the market value of mining companies was down 30% from the same period in the prior year.
Combined with declining commodity prices, this means that less is being made by producers, less is being raised by explorers and developers with the result that over time fewer project will be operating and developed and fewer Canadians will be employed in the sector. That means fewer Canadians working, raising families, contributing to their communities and paying taxes.
I know this fact will resonate with you given your pledge to act on the inclusion of Aboriginal people in Canada. The mineral industry is the largest private sector employer of Aboriginal people in Canada. When mining gets hurt though poor markets or bad policy, Canadians get hurt, and Aboriginal peoples in Canada get hurt disproportionately.
The good news is that there is a great deal that you can do to help. Even better is that many of the ways to help are consistent with your campaign promises.
Infrastructure is critical. The costs for miners of operating in the north are substantially higher than other regions. This isn’t due only to seasonal factors. A huge component is the lack of critical infrastructure: roads, power plants, ports and accommodation.
When you prioritize promised infrastructure spending please remember that when you build a road or bring electricity to a remote mine site you are almost certainly bringing these facilities to the adjacent communities many of which are populated by Aboriginal peoples.
Spend your political capital on the relationship with Aboriginal peoples. While infrastructure and investment will go a long way to improve the lot of Aboriginal peoples in Canada, they and the mining industry need the benefit of government leadership in settling a framework for working together.
Instead of leaving communities and companies to muddle through uncertain consultations and negotiating secret impact benefit agreements, use your capital to set clear timelines, rules and processes to ensure industry has certainty and transparency to ensure communities have the benefit of the jobs, growth and infrastructure that allows culture to flourish.
Bring financial certainty to the sector. Publicly and unequivocally commit to maintaining federal flow-through tax treatment to encourage exploration. In this capital constrained environment everything that can be done to assure industry that the next round of exploration financing can be raised will help.
A Canadian in Mining
P.S. – I would be remiss if I did not thank our industry association, the Prospectors and Developers Association of Canada (PDAC) for their great work, particularly the background work behind most of the facts referenced above. I recommend that you and your ministers spend some time with them talking about how we ensure that Canada continues to be a global leader in mining and reaps the benefits in terms of jobs, technology and infrastructure that goes with that distinction.
Sander Grieve is Head of Mining, Bennett Jones, Toronto